CONSUMERS could be in line for compensation after a Yorkshire-based financial services firm was declared in default by an industry watchdog.
The Financial Services Compensation Scheme (FSCS) wants to hear from people who believe they are owed cash in relation to Periwood Financial Services, which was based in Abbeydale Road, Millhouses, Sheffield.
Consumers may be entitled to up to £50,000 if they have lost money as a result of their dealings with an investment firm declared in default by the FSCS. The FSCS is the compensation fund of last resort for customers of authorised financial services firms.
If a firm becomes insolvent or ceases trading, the FSCS may be able to pay compensation to its customers.
There is no charge to individual consumers for using its service.
Periwood was declared in default because FSCS is satisfied that it is unable to pay claims.
Mark Oakes, the head of communications at the FSCS said: “We have already started paying compensation in respect of this firm.
“However, we’re encouraging anyone else who believes they may be owed money through their dealings with the firm to contact our initial contact team if they have not yet applied for compensation.”
The Yorkshire Post has tried to contact Periwood via email and telephone.
The company’s last known telephone line and email address were not receiving calls or messages.
Over the last decade more than 2,500 financial organisations – including 2,000 financial advisers – have collapsed.
Without the FSCS, consumers who invested in or through these firms would have lost their money.
The FSCS can pay compensation for financial loss if a firm is unable, or likely to be unable, to pay claims against it.
The FSCS is an independent body, set up under the Financial Services and Markets Act 2000.
In recent years, the FSCS has handled growing numbers of complaints linked to the alleged mis-selling of payment protection insurance (PPI).
PPI was sold to consumers to cover loan repayments if they couldn’t work due to illness or were made redundant.
However, many of these policies were sold to people who did not need them, or consumers who would not have been able to make a valid claim.
More than three-quarters of people claiming PPI compensation from the FSCS do so through a claims management company, it was revealed recently.
These companies take a cut of the compensation, which can be up to 25 per cent or more.
The FSCS figures are based on analysis of PPI claims between 2008 and 2011. It has helped more than 4.5 million people and paid out more than £26bn since 2001.
Although the number of claims submitted directly to the FSCS more than doubled from 2010 to 2011, the number coming from claims management companies far outstrips the number of individual claims in both years.
The average pay-out to consumers making a PPI claim through a claims management company is £4,534.
If the claims company takes 25 per cent, it pockets around £1,133 from an average successful customer claim.
Overall, the total number of PPI claims for failed institutions has increased considerably in the past year, with 60 per cent more people claiming compensation in 2011 compared to 2010.
Mark Neale, the chief executive of the FSCS, said: “Claims management companies take a sizeable part of the possible pay-out and are no more likely to make a successful claim than consumers can on their own.
“Each application is judged on its individual merits.”
The Financial Ombudsman Service is expecting to receive a record 165,000 PPI complaints in 2012/13.
In February, the FSA revealed that nearly £2bn of compensation payments were made last year to settle claims from the mis-selling of PPI.
The FSCS Initial Contact Team can be contacted on 0800 678 1100 or 020 7741 4100 or by email at email@example.com.
Further information about the FSCS is available on its website at www.fscs.org.uk.